The Quarterly Survey of Business Opinion, due out today, will be the key release in New Zealand this week, Craigs Investment Partners broker Chris Timms says.
The New Zealand Institute of Economic Research's survey should provide an up-to-date indication of how business sentiment was tracking as the survey would likely have been conducted after the Fonterra payout was revised and after the official cash rate cut.
For the December quarter, the QSBO showed a rebound in confidence with general business sentiment bouncing strongly from -10% in September to 13% in December.
‘‘You would expect this to reverse in the March quarter, given the ailing fortunes of the dairy sector, a stubbornly high currency and rising volatility in the global economy and financial markets.''
Tomorrow, the results from the latest GlobalDairyTrade auction would be released, he said.
At the last auction three weeks ago, prices fell slightly despite futures pointing to a rebound.
The headline GDT index fell 2.9% and whole milk powder prices were 0.8% lower. Prices were now 14% lower year-to-date and 29% below levels from this time last year, he said.
Across the Tasman, the Reserve Bank of Australia meets this afternoon and while no change was expected in the official cash rate, expectations had grown slightly for some action later in the year, Mr Timms said.
The RBA has a cash rate of 2% and the Reserve Bank of New Zealand has a cash rate of 2.25%. Both banks were expected to cut further.
‘‘While the Australian economy has been performing better than many expected, the strong Australian dollar will be of come concern to the RBA.''
The currency was up 12% against the US dollar since mid-January and was back at levels not seen since July last year.
Similar to what was being seen in New Zealand, the currency strength had led some economists to suggest the RBA might be forced to act in the hope of avoiding the economic drag of an overvalued economy, he said.
Cheaper fruit and vegetables had pushed the annual rate of inflation below the RBA's target range.
Consumer prices fell 0.2% in March, after dropping 0.2% in February, the Melbourne Institute's monthly inflation gauge showed.
In the 12 months to March, the inflation gauge rose 1.7%, below the central bank's target band of 2% to 3%.
